U.S. Dollar Index (DX) Futures Technical Analysis – Dollar Retreats from 20-Year High on Intervention Chatter

The U.S. Dollar is edging higher against a basket of major currencies on Monday, boosted by a combination of rising U.S. Treasury yields and safe-haven buying. The index touched its highest level since July 2002 before pulling back slightly.

According to Reuters, the current price surge is being fueled by aggressive hedge fund buying tied to rising Treasury yields. The move began last week after the Federal Reserve raised interest rates by 50 basis points.

At 12:20 GMT, June U.S. Dollar Index futures are trading 103.815, up 0.121 or +0.12%. On Friday, the Invesco DB US Dollar Index Bullish Fund ETF (UUP) settled at $27.71, up $0.05 or +0.18%.

While the current fundamentals indicate the dollar index could move higher even after extending its almost 9% rise this year, according to Reuters, there are reports of some emerging market central banks intervening to support their currencies. Even though such a move may not change the trend to down, it could trigger the start of a near-term correction.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through the intraday high at 104.210 will signal a resumption of the uptrend. A move through 102.375 will change the main trend to down.

The minor range is 102.375 to 104.210. Its 50% level or pivot at 103.295 is the first downside target and potential support.

The second minor range is 99.810 to 104.210. If the main trend changes to down then its pivot at 102.010 will become the next target.

The short-term range is 97.730 to 104.210. Its retracement zone is another downside target and potential value area. A move into this area could attract new buyers.

Daily Swing Chart Technical Forecast

The direction of the June U.S. Dollar Index on Monday will be determined by trader reaction to 103.695.

Bullish Scenario

A sustained move over 103.695 will indicate the presence of buyers. Taking out the intraday high at 104.210 will indicate the buying is getting stronger. This could trigger the start of another acceleration to the upside since the next major target is 107.300.

Bearish Scenario

A sustained move under 103.695 will signal the presence of sellers. If this generates enough downside momentum then look for the selling to possibly continue into 103.295.

Buyers could come in on the first test of 103.295, but if it fails then look for the selling to possibly extend into the main bottom at 103.375, followed by the second pivot at 102.010. This is a potential trigger point for an acceleration into 100.970 – 100.205.